London, February 11 The UK government has emphasized its first-mover advantage by signing a free trade agreement (FTA) with a rapidly growing Indian economy ahead of the European Union (EU), which it claimed had used Britain's deal as a "benchmark".
During a debate in the House of Commons on the India-UK Comprehensive Economic and Trade Agreement (CETA) earlier this week, the Opposition Conservatives insisted that the deal with "one of the largest economies on the planet, which is growing approximately five times faster than the European Union" could have been better.
"British businesses needed something with a really strong advantage to boost this country's growth. Instead of a weak deal, the Prime Minister came back with a deal that was not very effective," said Andrew Griffith, shadow business and trade secretary.
Chris Bryant, minister of state in the Department for Business and Trade (DBT), responded on behalf of the Labour government to stress that CETA was a "significant achievement" that "goes far beyond India's precedent and opens the door for UK businesses".
"Regarding services, the way we negotiated this deal means that it has the support of the Federation of Small Businesses, HSBC, Standard Chartered, EY, TheCityUK, and Revolut, and I don't think they see it as a 'weak deal'; I think they see it as a strong agreement," said Bryant.
The minister highlighted that India and the UK conducted trade worth 47.2 billion pounds last year, which was a 15 per cent increase year-on-year, placing India as the tenth-largest trading partner.
"India has the highest growth rate in the G20. It is likely to become the third-largest economy in the world by 2029. By 2050, India will have more than a quarter of a billion high-income consumers. Demand for imports is also expected to grow, reaching 2.8 trillion pounds by 2050. Assuming global foreign direct investment into India continues on its recent trajectory, it could reach 1 trillion pounds by 2033," the minister stated.
He highlighted that the trade deal signed during Prime Minister Narendra Modi's visit to the UK last year would boost Britain's GDP by 4.8 billion pounds, wages by 2.2 billion pounds, and bilateral trade by 25.5 billion pounds by 2040.
India will reduce tariffs on 90 per cent of goods, covering 92 per cent of current UK exports, giving the UK tariff savings of 400 million pounds a year immediately upon entry into force, rising to 900 million pounds after 10 years, with average India tariffs falling from 15 per cent to 3 per cent.
"Plagiarism is a form of flattery, so I am glad that the European Union has now reached a political agreement on its own FTA with India, for which it seems the UK deal was used as a benchmark, but the UK retains the first-mover advantage."
"I am hopeful that we will achieve entry into force before the end of the summer, so that UK businesses can start benefiting from the reduced tariffs this year, while the EU will still take some time to achieve ratification, and only the UK has secured access to India's 38 billion pounds federal procurement market," Bryant told MPs.
The Double Contributions Convention (DCC), signed off in Delhi this week to ensure temporary workers would not have to duplicate social levies in either country, came under criticism from some Opposition members.
"The deal will not undermine British workers... and it will not make it cheaper to use Indian workers. This agreement is about highly skilled workers employed by Indian companies on a temporary basis paying contributions to their own country rather than in the UK," stressed Bryant.
He admitted that while the Prime Minister Keir Starmer-led government “would have preferred” to have been able to secure a bilateral investment treaty (BIT) alongside the CETA, it stands ready to start that process “whenever India would like to do so”.
The British Parliament is ratifying the agreement signed by Modi and Starmer last July, including debates across both Houses and reviews by relevant committees on all aspects of the FTA, before it can be implemented in the coming months.